The core of the retrovirus Murine leukemia virus (MLV) consists of the Gag precursor protein and viral RNA. It assembles at the cytoplasmic face of the cell membrane where, by an unclear mechanism, it collects viral envelope proteins embedded in the cell membrane and buds off. The C-terminal half of the short cytoplasmic tail of the envelope transmembrane protein (TM) is cleaved off to yield R-peptide and fusion-active TM. In Moloney MLV particles, R-peptide was found to bind to core particles. In cells, R-peptide and low amounts of uncleaved TM were found to be associated with small core-like complexes, i.e. mild detergent-insoluble, Gag-containing complexes with a density of 1.23 g ml(-1) and a size of 150-200 S. Our results suggest that TM associates with the assembling core particle through the R-peptide before budding and that this is the mechanism by which the budding virus acquires the envelope proteins.